Coalition sheds crocodile tears over young jobless

Youth unemployment has risen above 1 million, but the eurozone crisis and slow global growth aren't to blame – the coalition is

Britain's jobless rate hit a 15-year high of 8.3% percent in the three months to September, when youth unemployment surged past one million people for the first time. Photograph: Facundo Arrizabalaga/AFP/Getty Images

It was clear Wednesday's jobless figures were going to be bad when it was announced that David Cameron was holding a breakfast summit at Downing Street to discuss youth unemployment.

Sure enough, the news released by the Office for National Statistics was dire. Unemployment rose at its fastest rate on the internationally agreed measure for almost 17 years, employment fell even more precipitously and – surprise, surprise – the number of young people out of work rose through the politically sensitive 1 million level.

The government's response was equally predictable: to blame the crisis in the eurozone and slower growth in the global economy, to shed a bucketload of crocodile tears and to pledge action to find jobs for young people.

But the explanation provided by the coalition is bogus. Unemployment is what is known as a lagging indicator of economic performance; it takes time for a slowdown in activity to feed through into the jobless figures.

Europe's crisis only really moved into its new, dangerous phase in late July and August, and would not have had any impact on the employment data, which covers the period from July to September.

Indeed, the evidence is that the labour market has been steadily weakening throughout 2011, with a marked deterioration over the past three or four months. A much more plausible explanation for the drop of almost 200,000 in employment in the three months to September is that the domestic economy is suffering from the intense squeeze on real incomes caused by high inflation, rocketing fuel bills and increases in taxes.

Here's the reality. The government inherited an economy in which unemployment was coming down. It is now going up. The government inherited an economy where schemes to help young people into work were nibbling away at youth joblessness. It scrapped schemes such as the Future Jobs Fund to save money, making its current hand-wringing particularly inappropriate.

When he announced his austerity programme shortly after becoming chancellor, George Osborne insisted that job losses in the public sector would be far outweighed by the opportunities that would be created by a liberated and thriving private sector.

Wednesday's figures give the lie to the chancellor's breezy optimism: 111,000 jobs were shed by the public sector in the three months to June, while 41,000 were created in the private sector. And this, note, was the three months to June. It was only subsequently that the big deterioration in the labour market took place.

Sadly, things are going to get worse before they get better, and maybe a lot worse. The Office for National Statistics said that average earnings, excluding bonuses, in the three months to September were 1.7% higher than in the same period of 2010. The annual inflation rate in September 2011 stood at 5.2%, meaning that real incomes are falling rapidly at a time when public spending cuts are starting to bite.

Europe's crisis will not help matters; manufacturing exports will be lower, credit conditions tighter and both consumer and business confidence will be shaken. But even were the problems of monetary union to be solved overnight – which is unlikely – the outlook for UK jobs would still be poor.

The question, therefore, is what the government intends to do about it. Osborne has insisted that there will be no U-turn on the deficit reduction strategy but is sure to address youth unemployment in his autumn statement at the end of the month. Lower national insurance rates might provide an incentive for employers to hire workers under the age of 25, but only if demand for labour is sufficiently strong. At present, there is no reason to think that it will be.

More than 1 million young people are now unemployed and the government is blaming the trend on the problems in Europe. Is that true? Polly Curtis, with your help, finds out. Get in touch below the line, email your views to polly.curtis@guardian.co.uk or tweet @pollycurtis